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EXECUTIVE INTERVIEW
By Joe Petrie
A Strong Future for Airport Retail
After more than 30 years of growth, Hudson Group CEO doesn't see business slowing down anytime soon.
A staple of airport retail across North America, Hudson Group is evolving to meet changing needs of travelers. The company made recent announcements about major contracts at several airports.It also announced a new partnership with FAO Schwarz and the company officially went public in February and is now listed on the Nasdaq.
Airport Business recently spoke with Hudson Group President a nd CEO Joe DiDomizio to talk about the current status of the retailer and what he sees for the future.
AIRPORT BUSINESS: THERE'S A LOT OF PRESSURE RIGHT NOW ON THE RETAIL MARKET. CAN YOU TALK ABOUT SOME OF THE PRESSURES YOU'RE SEEING AS AN AIRPORT RETAILER?
Joe DiDomizio: Retail in general might have some pressures relative to how ecommerce is cannibalizing street retailers, but our business is very different than street retail. When you get to an airport, we're satisfying the immediate needs and wants of travelers. If you're buying something online in an airport that's 23 hours too late. We have a captive audience. Average dwell time is around 75 minutes. These customers have a high propensity to spend and we really focus on catering to their immediate needs and wants. Travel is a very stressful thing and when you're stressed you tend to have certain needs and they tend to be exacerbated by the stress of travel, so as retailers we're very progressive in this area and we're really in a good place. We're not seeing the pressures that the street retailers are.
AB: WHAT KIND OF ROLE DO YOU SEE TECHNOLOGY PLAYING IN THE TYPE OF RETAIL YOU'RE CONDUCTING IN AN AIRPORT?
JD: We're a brick and mortar retailer. When you're in an airport, you have certain wants and needs and they need to be satisfied while you're there. The opportunity we have with the really focused market we serve in airports is a unique one. We really see a long-term opportunity to leverage digital platforms, such as product consulting, payments and individual promotions. This is a way to improve customer service and conversions in our stores and ultimately
drive long-term sales growth.
AB: WHAT CHALLENGES DO YOU SEE NOW AS AN AIRPORT RETAILER GIVEN IT'S SO DIFFERENT FROM A STREET RETAILER ESPECIALLY GIVEN THE RECORD NUMBERS OF PEOPLE TRAVELING BY AIR?
JD: I love our business. Travel retail is a growing and very resilient industry. Passenger volumes grew 3 percent annually on average from 2010 to 2016. That's expected to continue through 2025. Sales at the top 35 airports grew to approximately $8 billion in 2016. That's a growth of 7 percent annually since 2010. Airports are these very dynamic and constantly evolving places. They're always looking to grow non aeronautical revenue. I think this puts us in a very advantageous position relative to traditional retailers and much of our competition. Our merchandising mix is evolving quickly to meet the immediate needs and wants of the travelers. I think the challenge we have is to be proactive by meeting those changing habits because it has happened very quick.
Joseph DiDomizio, president and CEO,
Hudson Group
Hudson Group
34 airportbusiness May 2018